Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on September 20, 2021 at 11:14

I would expect the Drilling and Completion costs for this well, baring any unforeseen problems, to be in the neighborhood of what Goodrich stated in their corporate presentation today for their 4600' Haynesville laterals:  ~$7.2 million.

Permalink Reply by Rock Man on September 20, 2021 at 11:19

With costs that high, 6-7 BCF probably marginal economics

Permalink Reply by shelbyco on September 20, 2021 at 12:42

I don't doubt that. What is the typical goal for breaking even on these types of wells (timing-wise)? 

Permalink Reply by Rock Man on September 21, 2021 at 11:31

HV wells that start off at 20+ MMCF per day will be paying out in about a year. Obviously varies with gas pricing

Permalink Reply by Skip Peel - Mineral Consultant on September 21, 2021 at 11:38

In addition to the price of an mcf, the Net Revenue Interest (NRI) is important to calculating payout.  Currently a lot of new drills on recent leases provide NRI's in excess of 75%.  Throughout the early Haynesville, NRI's were often less than 75% and in some cases, considerably less.

If all leases in a drilling unit are a quarter royalty, the operator's NRI would be 75%.  Pay out 25% in royalties and net 75%.

Permalink Reply by shelbyco on September 27, 2021 at 11:37

Thank you for your replies, Rock Man and Skip Peel. Because of my background, I have a decent handle on "math" end of things, I just don't know much about the business considerations for operators.I was mainly trying to get a handle on roughly what sort of initial production a company would like to see to make a $7.2M well economically feasible, acknowledging that variables like gas prices and NRI certainty make this a moving target.  I have 10+ small interests in N and NW Shelby County (none in shale), so that's the primary reason for my interest.I looks like prices would likely need to increase a good bit more before a well like the one I mentioned above would project the sort of payout that would likely interest the typical operator. Thanks again!

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